Strong performance growth and plans for Hong Kong listing: Yuanjie Technology joins the "Thousand-Yuan Stock Club"

China Economic News reporter Gu Mengxuan Li Zhenghao Guangzhou Beijing reports

After entering the A-share “1,000-yuan stock club,” the optical-chip leader Source Photonics Technology (688498.SH) further advances its process toward an HK stock listing and has released its 2025 annual report.

After the market close on March 25, Source Photonics Technology’s “Announcement on Submitting an H-Share Issuance and Listing Application to The Stock Exchange of Hong Kong Limited and Publishing the Application Materials” shows that the company plans to accelerate its global market expansion by launching an “A+H” dual-platform strategy.

On March 24, Source Photonics Technology released its 2025 annual report. Judging from the company’s various operating data in the annual report, in 2025 the company successfully turned losses into profits, with key indicators such as revenue and net profit rising significantly.

A reporter from The China Business News noted that on March 20, Source Photonics Technology’s share price successfully broke through 1,000 yuan per share, hitting a historical high and becoming the eighth 1,000-yuan stock in A-share history; as of the close on March 26, the share price of Source Photonics Technology was 1,140.01 yuan per share, the second-highest priced stock in the current A-share market, second only to Guizhou Moutai (600519.SH), which trades at 1,401.18 yuan per share.

Nanning College financial expert and PhD Shi Lei told reporters that Source Photonics Technology’s plan to list in Hong Kong aims to, by building an “A+H” dual financing platform, leverage Hong Kong’s internationally oriented capital advantages to provide “capital transfusion” for the company’s capacity expansion and R&D; at the same time, it helps break through the bottleneck of “regionalized survival,” providing capital and brand backing for building a factory in the United States and expanding overseas. While ensuring supply chain security, it also benchmarks international industry giants to reconstruct its valuation system, thereby comprehensively enhancing its overall competitiveness in the global AI compute power competition.

Data center business takes off

Reporters noted that in early March this year, Source Photonics Technology had already begun planning its Hong Kong stock listing. On March 7, Source Photonics Technology released an “Announcement on the Preliminary Planning of the Issuance of H-Share Stock and Related Matters for Listing on The Stock Exchange of Hong Kong Limited.” The announcement states that its purpose for listing in Hong Kong is to continuously advance the company’s internationalization strategy and global expansion plan, build an international capital operation platform, strengthen its ability to raise funds overseas, and further enhance the company’s capital strength and overall competitiveness.

One day before Source Photonics Technology announced that it would list in Hong Kong, the company released its 2025 annual report. The annual report shows that in 2025, the company’s operating revenue was 601 million yuan, up 138.5% year over year; attributable net profit to shareholders was 191 million yuan, up 3,212.62% year over year; net profit after deducting non-recurring items attributable to shareholders was 167 million yuan, up 1,563.52% year over year; and net cash flow from operating activities was 150 million yuan.

In its annual report, Source Photonics Technology points out that in 2025, against the backdrop of ongoing growth in demand for optical chips driven by advances in artificial intelligence technology, based on its technical accumulation and product performance, the company optimized resource allocation and improved the efficiency and quality of resource deployment. In the data center sector, sales revenue grew significantly; its revenue contribution exceeded 50%, becoming an important source of income for the company.

The annual report data shows that in 2025, Source Photonics Technology’s data center business revenue reached 393 million yuan, up 719.06% year over year. The share of this business in the company’s total revenue has already exceeded 65%.

Gao Zhengyang, a special researcher at Su Shang Bank, told reporters that the core driving force behind Source Photonics Technology’s sharp profit growth in 2025 is the rapid scale-up of its data center business. The sustained surge in global demand for compute power has accelerated the construction of data infrastructure, which in turn has led to a surge in demand for optical chip products.

Shi Lei told reporters that Source Photonics Technology’s data center segment has a gross margin as high as 72.21%, which greatly optimizes the overall profitability structure. At the same time, the company’s traditional telecommunications business remains stable, and combined with the positive contributions from investment income and government subsidies, it jointly drove the company to achieve a “double leap” in both performance and profitability.

In its annual report, Source Photonics Technology introduces that its main products are high-power CW laser driver chip(s) required for the silicon-photonics solution. These chips need to meet performance indicators including high power, high coupling efficiency, and a wide operating temperature range, which places higher requirements on laser driver chips in terms of design, manufacturing processes, and test reliability stability.

Based on years of deep accumulation in the DFB laser field—“design + process + testing”—and to meet the demand for high-speed optical modules, the CW 70mW laser driver chips were shipped in batches. This product is the main product for the data center business. Meanwhile, at the market end, the company strengthened commercial expansion and gradually entered broader customer supply chains.

Source Photonics Technology was still loss-making in 2024, but successfully turned profitable in 2025. In the first three quarters of 2025, the company’s net profit growth rate reached as high as 19,348.65%, drawing market attention. What is the “secret” behind Source Photonics Technology’s turnaround from loss to profit?

Shi Lei told reporters that Source Photonics Technology’s shift from losses in 2024 to a sharp increase in profits in 2025—the “ice and fire” contrast—fundamentally lies in the fundamental reshaping of its business structure.

Shi Lei said that in 2024, Source Photonics Technology fell into a “increase in revenue but not in profit” loss predicament because it was deeply stuck in the telecommunications market’s red ocean, where competition in mid- and low-speed rate products was intense and caused gross margin to decline. In contrast, in 2025, the company seized the historical opportunity of the AI compute power boom. Its high-gross-margin CW silicon-photonics light source products scaled up massively in the data center market, driving this business’s revenue share to be the first to exceed 50%, enabling a strategic transition from a traditional telecommunications supplier to a core AI compute power target.

IDM model builds a moat

With AI compute power as a tailwind and its performance continuing to stand out, Source Photonics Technology’s share price has kept climbing. On March 20, the company’s share price successfully broke through 1,000 yuan per share, closing at 1,114.99 yuan per share, setting a historical high and becoming the eighth 1,000-yuan stock in A-share history.

Why was Source Photonics Technology’s share price able to break through 1,000 yuan? Shi Lei told reporters that Source Photonics Technology’s entry into the ranks of 1,000-yuan A-share stocks is the result of the simultaneous resonance of three factors: the AI compute power boom, explosive growth in performance, and the scarcity of the IDM model. The global AI infrastructure boom has triggered an exponential demand for optical chips. The company precisely positioned itself. In 2025, attributable net profit surged to 191 million yuan, achieving a reversal from loss to profit, further strengthened by strong capital market enthusiasm, providing solid support for the stock price.

Interviewees told reporters that Source Photonics Technology’s surge in performance is closely related to its IDM (vertically integrated manufacturing) full-process model.

Shi Lei told reporters that its IDM full-process model, covering everything from design, manufacturing to packaging and testing, forms the company’s core competitive moat. This not only ensures capacity delivery and technological iteration, but also drives the revenue share of its high-gross-margin data center business to be the first to exceed 50%, significantly optimizing the profitability structure and ultimately enabling the company to stand out amid industry tailwinds.

Gao Zhengyang told reporters that the company has built an IDM full-process business system covering chip design, wafer manufacturing, chip processing, and testing. This enables core technologies to be independently controlled and more effectively supports deep customized services for leading customers, continuously optimizing product performance and yields. As a result, it has established a solid competitive barrier in the high-speed optical chip field.

Reporters noted that in A-share history, there have previously been eight 1,000-yuan stocks (some reached or are still reaching above this level). Of these, only three currently still trade above 1,000 yuan: Guizhou Moutai, Source Photonics Technology, and Cambricon (688256.SH).

What kind of stocks will become 1,000-yuan stocks? Shi Lei told reporters that, looking across A-share history, companies that can join the “1,000-yuan stock club” usually have five core characteristics: scarcity in their track, explosive performance, technological barriers, institutional consensus, and relatively small float. “These companies are all riding major industry tailwinds. With a moat built on technology or business models that are hard to replicate, they show astonishing performance growth, thereby gaining sustained pursuit from mainstream capital.” Shi Lei said.

“Stocks that become 1,000-yuan stocks generally have traits such as scarcity, high barriers, high growth, a favorable track, small float, concentrated institutional holdings, continuously improving performance, and an upward trend in the business’s industry cycle,” said Zhang Xinyuan, head of a research and consulting firm named Kefangde.

“However, high stock prices also come with the risk of a ‘1,000-yuan stock curse.’ Only companies that can convert technological advantages into continuous and stable profitability can truly break the curse and stand steadily above the 1,000-yuan mark for the long term,” Shi Lei told reporters.

Investors should not chase price blindly

Reporters noted that on the second trading day after Source Photonics Technology’s share price broke through 1,000 yuan (March 23), the company’s share price fell, dropping 7.8%. In the following March 24 and March 25 sessions, the company’s share price continued to rebound.

Regarding Source Photonics Technology’s March 23 share price drop, interviewees believe that, in essence, it was a normal technical adjustment and profit-taking after a rapid prior run-up, not a change in fundamentals.

Shi Lei said that after the company’s share price broke through 1,000 yuan and accumulated a huge gain in the short term, some funds chose to realize profits. Combined with the overall pullback of the CPO sector on the day, it jointly triggered the stock’s decline. However, the fund flow data shows that on that day, the main funds recorded a net inflow of more than 30 million yuan against the trend. This indicates that institutional funds had not left the market; instead, they may have taken the opportunity to absorb shares. This reflects that the market still has confidence in the company’s long-term value, not merely panic selling.

Zhang Xinyuan told reporters that the March 23 share price decline of Source Photonics Technology was due to some funds that had laid positions earlier, as well as public funds and northbound funds, choosing to take profits. It does not count as a fundamental deterioration, but it is a typical case of funds exiting at high levels.

Wind data shows that the price-to-earnings ratio is about 510 times when calculated based on the company’s 2025 performance. What is Source Photonics Technology’s current valuation? Is it overvalued?

Shi Lei told reporters that Source Photonics Technology currently shows clear characteristics of “both high growth potential and the risk of a high valuation coexisting.” On the one hand, the company, by leveraging the dividends from the AI compute power track and explosive performance growth, gains a high premium in the market and is regarded as a scarce core asset.

On the other hand, Shi Lei said investors should be highly alert to risks noted in the company’s official guidance, including the possibility of a rapid drop in valuation. Also, there are hidden risks such as technological iteration, performance falling short of expectations, and a relatively small operating scale. He suggests that aggressive investors focus on long-term logic, while conservative investors should exercise extreme caution about chasing the stock at current high levels.

Gao Zhengyang said that in the long run, as demand for compute power continues to surge and construction of compute power centers steadily advances, the market’s demand for high-speed optical chips is expected to remain strong. However, investors also need to be wary of the sustainability of the company’s subsequent revenue scale-up and the potential risks of valuation pullbacks. They should make investment decisions prudently in line with their own risk preferences, and never chase the price blindly.

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